Echelon, BLG team up to create “capital pool company”

The Canadian equities trading landscape is slated to undergo some changes as the Toronto Stock Exchange (TSX) is proposing to revise its market-making program while alternative trading system (ATS), Liquidnet Canada, is seeking to expand the orders its trading platform handles.

The TSX is proposing changes to its rulebook and to marketplace functionality in order to alter its market-making program. The key changes include adding a secondary market maker to TSX-listed equities, excluding ETFs, and making improvements to the minimum guaranteed fill (MGF) facility. The proposals are out for comment until May 8 and, if regulatory approval is granted, the TSX plans to implement the changes in the fourth quarter.

“TSX believes that modifications to the program are necessary to continue to promote the highest level of market quality from market makers, address policies and rules that are no longer applicable, and better align functional and financial incentives with balanced and relevant performance obligation,” the company says in a notice outlining its plans.

At the same time, Liquidnet Canada is also proposing to expand access to its ATS to allow brokers to send all types of order flows, including principal orders, to the ATS, not just agency orders. At the same time, it would increase the minimum order size for broker block orders to 10,000 shares from 5,000 shares.

“This functionality will allow broker participants to seek block-sized liquidity in the Liquidnet Canada ATS and other dark/lit venues simultaneously, without risk of overexecution. Brokers will also benefit from reduced information leakage and associated predatory trading behavior on large size orders. This change will also benefit the marketplace as a whole by not forcing participants to choose one market over another, thereby exposing liquidity more broadly across multiple marketplaces,” Liquidnet Canada’s proposal says.

“The proposed change will also permit Liquidnet to source additional liquidity for buy-side subscribers and align with current practice in the U.S. and European markets,” the proposal, which is also out for comment until May 8, adds. The timing of implementation will be announced once it receives regulatory approval for the changes.

Finally, Bloomberg Tradebook Canada Co. announced that it has closed its equities trading venue and is no longer carrying on business as an ATS in Ontario.

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